Which place’s debt rules apply—and who can help?

SettleADebt.com — S_KS, PASS-04

Kansas bond, insurance, and alternative-security component

Fresh PASS-04 browsing: October 25–26, 2026, Pacific; final verification October 26, 2026 Pacific / October 26, 2026 UTC Actual model: GPT-5.6 Sol Pro Review character: Same-project continuation in the original authorized Chat; not an independent review Component boundary: Kansas CSO bond trigger, amount, form, issuer, lifecycle, claims, recovery boundaries, and possible insurance or alternative security. This does not regenerate PASS-01 licensing/fees, PASS-02 corrections, or PASS-03 funds work.

All prior Kansas conclusions and holds remain preserved except where this pass supplies new security-specific evidence. No named provider, surety, policy, bond, rider, claim, or claimant was investigated.

Executive determination

Kansas requires each applicant or licensee under the Kansas Credit Services Organization Act to file a surety bond in a form acceptable to the State Bank Commissioner. The verified statutory amount is $25,000. The statute permits an increase up to $1,000,000, but conditions that increase on further definition by rules and regulations adopted by the Commissioner. The current official OSBC Article 25 compilation lists only K.A.R. 17-25-1, which sets the governmental application and renewal fees; it contains no published bond-adjustment formula, volume tier, consumer-count tier, trust-balance tier, or individualized risk formula. Thus, $25,000 is the only current amount established from the operative public law reviewed here; $1 million is an outer statutory ceiling, not the current required amount. Kansas Legislature+3

The required instrument is a surety bond, not merely general liability, professional liability, errors-and-omissions, crime, cyber, or fidelity insurance. The phrase “surety or insurance company” identifies who may issue the surety bond; it does not create an alternative insurance-policy pathway. No cash deposit, certificate of deposit, letter of credit, collateral account, net-worth substitution, bond waiver, or self-insurance alternative was established from the current CSO statute, current Article 25 compilation, or current public OSBC materials. That is a bounded public-source result, not proof that no confidential approval, later order, or unindexed instrument exists.

The principal is the applicant or licensee, and the bond is payable to the Office of the State Bank Commissioner. Its statutory purpose is to secure faithful performance of all licensee duties and obligations. It is available for:

1. OSBC expenses, fines, and fees levied under the Act; and
2. Consumer losses or damages that the Commissioner determines resulted from the applicant’s or licensee’s failure to comply with the Act. Kansas Legislature

The statute does not publicly specify the complete claim mechanism. It does not say whether a consumer may submit a claim directly to the surety, sue the surety directly, must first obtain an OSBC determination, or must obtain a final order or judgment. It also does not establish priority between agency amounts and consumer losses, allocation among multiple consumers, replenishment after a payment, exhaustion rules, proof-of-loss contents, or the effect of insolvency. K.S.A. 50-1133 separately allows an injured consumer to pursue damages against the violating CSO, but it does not expressly create a direct bond action or make the bond amount a cap on the CSO’s liability. Kansas Legislature+2

The bond cannot terminate without 30 days’ prior written notice to the Commissioner. Cancellation does not remove liability for violations occurring before the effective cancellation date. The statute also creates:

• A two-year liability period measured from each action or inaction giving rise to a bond claim.
• A separate requirement that the bond not expire until two years after the earliest of license surrender, revocation, or expiration.

Those are separate clocks. The statute does not expressly reconcile every overlap, define when a claim must be presented, or convert either provision into the complete civil limitations period. Kansas Legislature

Kansas uses NMLS’s electronic surety-bond system for the CSO company license. NMLS’s public adoption table lists the Kansas Credit Services Organization License, and its current guide explains that the regulator creates the bond form rendered in NMLS. The exact current Kansas bond text, riders, accepted bond amount field, and state-specific checklist were not publicly extracted. The only complete Form CSO-2 located was a privately hosted 2020 “reference only” specimen that still uses obsolete “registration/registrant” terminology. Its additional terms are useful leads, not verified current mandatory terms. NMLS Resource Center+3

A. Substantive findings

1. Operative security requirement and model coverage

1.1 Trigger

K.S.A. 50-1119 applies to each applicant or licensee. It is an entity-level licensing obligation, not a fee-triggered or funds-custody-only obligation. Therefore, once a business model is classified as covered and the entity is required to obtain a Kansas CSO license, the same bond statute applies whether its covered branch involves:

• Receiving and distributing consumer funds.
• Negotiating or offering to negotiate debt reductions or deferrals without receiving creditor-payment funds.
• Offering covered credit-improvement services.
• Combining those functions in a hybrid model.

The bond provision does not state different amounts for custodial DMPs, noncustodial settlement companies, credit-repair models, or hybrids. It does not key the amount to enrolled debt, fees, savings, trust balances, creditor count, Kansas consumer count, revenue, or transaction volume. Kansas Legislature

This conclusion is conditional on the prior classification and exemption analyses. A model that genuinely falls outside the Act does not become subject to K.S.A. 50-1119 merely because it calls itself counseling. Conversely, nonprofit, remote-provider, affiliate, administrator, attorney-connected, or bank-connected labels do not themselves eliminate the bond. A valid statutory exemption must actually apply.

1.2 One applicant or licensee; no automatic affiliate coverage

The bond secures the applicant’s or licensee’s performance. The current statute does not state that the bond of one legal entity automatically covers:

• A parent or subsidiary.
• A separate affiliated settlement company.
• An independent account administrator.
• A lead generator.
• A separate law firm.
• A third-party processor.
• A separately licensed branch or other legal entity.

If a separate entity is itself required to obtain a Kansas CSO license, K.S.A. 50-1119 textually requires that applicant or licensee to file its own bond. The NMLS adoption table lists the CSO authorization as a company license and states that branch bonds are not accepted, which is consistent with a company-level instrument rather than a separate branch instrument. The table does not resolve multi-entity or alter-ego treatment. NMLS Resource Center

The privately hosted 2020 Form CSO-2 specimen refers to failures by the principal “or its agent,” but that wording is not independently present in K.S.A. 50-1119, and the current official NMLS-rendered form was not obtained. Agent coverage therefore remains form- and fact-dependent rather than a categorical PASS-04 conclusion. Axcess Surety

1.3 Applicant, principal, obligee, and issuer

1.4 Bond versus other financial requirements

Kansas keeps several concepts distinct:

K.S.A. 50-1118 authorizes the Commissioner to evaluate financial responsibility and condition, but it supplies no numeric CSO net-worth minimum. The current Article 25 rule establishes only the $400 and $150 governmental fees. Kansas Legislature+1

Model-security matrix

2. Amount, formula, adjustment authority, alternatives, and waiver

2.1 Current verified amount

K.S.A. 50-1119(e) says the bond amount shall be $25,000. This is not a percentage formula or a floor keyed to business volume. It is the affirmative statutory amount. Kansas Legislature

2.2 Increase authority

The amount may be increased up to $1 million as further defined by rules and regulations adopted by the Commissioner. The statute does not itself provide:

• An enrolled-debt formula.
• A Kansas revenue formula.
• A consumer-count formula.
• A trust-funds formula.
• A complaint or enforcement-history scale.
• An individual discretionary risk score.
• A branch multiplier.
• A first-year versus renewal schedule.
• An automatic annual adjustment.
• CPI indexing.

The current official OSBC compilation’s Article 25 outline lists only K.A.R. 17-25-1, and the full rule concerns application and renewal charges. No published Article 25 bond-increase rule appears in that compilation. The earlier direct Kansas rules endpoint returned HTTP 405 and was not treated as proof of absence. Kansas Bank Commissioner+1

Result: A higher bond cannot be justified from the $1 million ceiling alone. A valid adopted rule defining the increase—or other demonstrably operative authority—would have to be identified before assigning a higher amount. No such amount formula was verified in this pass.

2.3 Alternative security

The statute requires a surety bond. No current reviewed provision establishes substitution with:

• Cash.
• Certificate of deposit.
• Irrevocable letter of credit.
• Treasury securities.
• Escrowed collateral.
• Trust-account excess.
• Positive net worth.
• Fidelity bond.
• Errors-and-omissions coverage.
• General liability coverage.
• Self-insurance.
• Parent guarantee.
• Waiver by the Commissioner.

A private surety may require collateral or an indemnity agreement as a condition of issuing the bond, but no such private underwriting arrangement was researched, and it would not itself become a statutory substitute.

2.4 Insurance wording

K.S.A. 50-1119 allows the required surety bond to be issued by a “surety or insurance company” authorized to conduct business in Kansas. This describes eligible issuers. It does not authorize an ordinary first-party or third-party insurance policy in place of the bond.

The current official CSO compilation did not contain a separate fidelity, crime, professional-liability, or errors-and-omissions requirement. The bounded administrative-interpretation and guidance checks also did not identify a CSO security interpretation. That remains a qualified public-source result rather than a universal no-insurance conclusion. Kansas Bank Commissioner+1

Amount and instrument matrix

3. Current forms, riders, certificates, and filing route

3.1 OSBC public page

OSBC’s current applications page states that CSO applications and renewals use NMLS. It does not publicly link a paper CSO surety-bond form, rider, certificate, collateral form, bond-claim form, or bond-release form. Its listed CSO supplemental forms are the trust-account consent and surrender report. The displayed CSO renewal instructions still concern the 2025 report and April 1, 2026 deadline, so they are not a complete current-cycle checklist. Kansas Bank Commissioner

3.2 NMLS electronic surety bond route

NMLS’s July 29, 2025 ESB adoption table lists the Kansas Office of the State Bank Commissioner and the Credit Services Organization License. The table is evidence that the license uses NMLS electronic surety-bond functionality as of that document’s update date. It does not provide the Kansas penal sum, claims terms, or current form version. NMLS Resource Center

The August 15, 2026 NMLS Policy Guidebook explains the generic process:

• The regulator creates the bond form.
• The form is rendered in NMLS.
• A surety company or authorized surety producer creates the bond.
• Surety and licensee sign electronically.
• The instrument is transmitted to the regulator through NMLS.

The guidebook repeatedly states that it is for guidance and does not supersede state law or state-specific requirements. Nationwide Licensing System+1

NMLS’s operational material also supports generic lifecycle functions for new bonds, riders, increases, cancellations, returns, voids, and replacement bonds. Those are system functions, not independent Kansas legal authority. Nationwide Licensing System+1

3.3 Form CSO-2 specimen

A two-page Form CSO-2 was located on a private surety-vendor site. It states:

• “ESB Form Effective 07/01/2020.”
• “This document is for reference ONLY.”
• The official form is rendered electronically in NMLS.

It includes fields for bond number, amount, effective date, principal/NMLS number, and surety. It uses the older words “registered,” “registrant,” and “registration,” notwithstanding the 2017 statutory shift to licensing. Axcess Surety+2

Additional specimen terms include:

• Joint and several obligation of principal and surety.
• Aggregate surety liability capped at the bond amount regardless of claims or claimants.
• Payment to OSBC within 60 days after specified notice.
• Coverage language mentioning the principal’s agent.
• Certified-mail termination notice to both principal and OSBC.
• Reduction of liability.
• Written OSBC release.
• Reinstatement or increase by a new bond or rescission of cancellation.
• A blank effective date defaulting to surety execution.
• Effectiveness conditioned on OSBC acceptance.

These details are not elevated to current mandatory Kansas law because:

1. The file is privately hosted.
2. It is explicitly marked reference-only.
3. It uses stale statutory terminology.
4. The current NMLS-rendered version was not accessed.
5. No current OSBC page authenticates that exact file.

3.4 Current-form and checklist gap

The NMLS checklist compiler was located but did not expose the current Kansas CSO checklist through the public text interface used in this session. No account or login was used, and no workaround was attempted. Therefore, the following remain unverified:

• Current bond-form version.
• Whether 2020 Form CSO-2 remains the live NMLS text.
• Current amount configured in NMLS.
• Required surety-authority evidence.
• Accepted power-of-attorney format.
• Rider forms.
• Name-change, merger, or amount-change rider requirements.
• Replacement-bond procedure.
• Current state-specific new-application checklist.
• Whether any nonpublic license item can require a different instrument.

4. Effective coverage, maintenance, cancellation, replacement, and tail

4.1 Filing and maintenance

Failure to file and maintain the required bond is a statutory ground for license denial, suspension, revocation, or refusal to renew after notice and an opportunity for a hearing. That makes ongoing bond maintenance a continuing licensure obligation. The statute does not require issuance of a brand-new bond each year if an accepted bond remains in force. Kansas Legislature

4.2 Initial effective date

K.S.A. 50-1119 requires a bond in a form acceptable to the Commissioner but does not state the exact moment an instrument becomes effective. The 2020 reference specimen says:

• The stated effective date controls.
• If blank, the surety’s execution date applies.
• The bond becomes effective if accepted by OSBC.

Because the current official form was not obtained, those rules remain specimen terms rather than a final current-law conclusion.

4.3 Cancellation notice

The operative statute requires 30 days’ prior written notice to the Commissioner. It does not expressly require statutory notice to:

• Consumers.
• Creditors.
• The principal.
• Affiliates.
• A trust-account bank.
• Other regulators.

The general Kansas time-computation statute applies to statutory periods that do not specify another method. It excludes the triggering day, counts intermediate Saturdays, Sundays, and legal holidays, and includes the last day subject to its weekend/holiday rule; when time is measured before an event, its “next day” concept is applied backward. K.S.A. 50-1119 nevertheless does not specify whether the cancellation notice is effective upon mailing, NMLS submission, delivery, or receipt. The current accepted form or agency practice is needed for that issue. Kansas Legislature

The 2020 specimen uses certified mail to both the principal and OSBC, but that additional delivery mechanism has not been verified as the current NMLS form.

4.4 Pre-cancellation liability

Cancellation does not affect liability for violations occurring before the effective cancellation date. The principal and surety remain liable for two years from the date of the action or inaction giving rise to the bond claim. Kansas Legislature

An act after the old bond’s effective cancellation date is not established as covered by that old instrument. A replacement bond may cover later conduct, but its effective date, accepted terms, and any gap must be examined. NMLS says a new bond is needed to restore coverage after a bond is canceled or voided, but Kansas law—not the generic NMLS screen—determines the legal consequence. Nationwide Licensing System

4.5 License-end tail

The bond may not expire until two years after the earliest of:

• License surrender.
• License revocation.
• License expiration.

This is separate from the two-year clock measured from the underlying act or omission. The statute does not expressly say:

• Which clock controls when they end on different dates.
• Whether a claim must be filed, determined, sued upon, or paid within the two years.
• Whether tolling applies.
• Whether renewal of the license resets either clock.
• How successive or continuing violations are dated.
• Whether a late-discovered loss changes the clock.

Those issues remain for a claims, limitations, and controlling-case pass. Kansas Legislature

4.6 Replacement, reinstatement, and reduction

The statute does not state a replacement-bond grace period. A coverage gap creates a “failed to maintain” issue.

NMLS generically supports:

• Bond increases.
• Cancellation notices.
• Cancellation rescission.
• Replacement by a new bond.
• Riders and form-version updates.

The 2020 specimen also addresses reinstatement, increases, reductions, and OSBC release. No current Kansas-specific rider or release form was obtained, so those exact procedures remain unresolved. Nationwide Licensing System+2

Event and continuing-liability matrix

5. Claimants, covered losses, procedure, aggregation, and excess liability

5.1 Statutory recovery categories

The bond is available for two categories:

Agency category

• Expenses levied by the Commissioner.
• Fines levied by the Commissioner.
• Fees levied by the Commissioner.

Consumer category

• Losses or damages incurred by a consumer.
• Caused by the applicant’s or licensee’s failure to comply with the Kansas CSO Act.
• Determined by the Commissioner. Kansas Legislature

The bond does not expressly cover every commercial loss, creditor loss, affiliate loss, contractual expectation, reputational injury, punitive award, attorney fee, or federal-law violation. Coverage depends on the statutory category and current bond language.

The 2020 specimen is broader in some respects, referring to applicable state and federal law, agents, settlement refunds, final judgments or orders, and a 60-day remittance period. Those additional provisions remain specimen-level only. Axcess Surety

5.2 Commissioner determination versus court judgment

K.S.A. 50-1119(d)(2) uses a Commissioner-determination predicate for consumer losses. It does not expressly require a prior court judgment. Separately, K.S.A. 50-1129 authorizes the Commissioner, after the required process, to impose fines, restitution, disgorgement, interest, and affirmative relief. The statute does not fully specify how those orders become claims against the bond. Kansas Legislature

The public specimen distinguishes among:

• Unpaid agency expenses and fees.
• Settlement obligations.
• Amounts due under final judgments or orders.
• Commissioner-determined consumer losses.

That structure cannot be treated as the current mandatory claim protocol without the current NMLS-rendered form.

5.3 Who may present or sue on a claim

The bond is payable to OSBC. Consumers are named as persons whose losses may be paid, but K.S.A. 50-1119 does not expressly state that an individual consumer may:

• Present a claim directly to the surety.
• Sue the surety without OSBC participation.
• Obtain payment merely by sending a complaint.
• Enforce the bond as a third-party beneficiary.
• Bypass the Commissioner’s loss determination.

No current bond-specific Kansas decision was located resolving direct standing.

K.S.A. 50-1133 separately allows an injured consumer to sue for damages, with a floor tied to amounts paid to the CSO plus attorney fees and costs, and possible punitive damages. It does not identify the surety as the defendant or limit recovery to the bond. Kansas Legislature

5.4 Aggregate limit

K.S.A. 50-1119 sets the bond amount but does not expressly say whether the penal sum is:

• Per claim.
• Per consumer.
• Per occurrence.
• Per annual period.
• Aggregate for the entire bond.
• Automatically replenished.

The 2020 specimen states that the surety’s aggregate liability for all claims and claimants cannot exceed the bond amount. Because the specimen’s current status is unverified, that aggregate term may be used only as a conditional example, not as a definitive current Kansas claims conclusion. Axcess Surety

5.5 Priority, allocation, exhaustion, and replenishment

No reviewed operative provision supplies a priority rule among:

• OSBC expenses.
• OSBC fines.
• OSBC fees.
• Restitution.
• Individual consumer losses.
• Multiple groups of consumers.
• Earlier and later claims.
• Claims from different bond years.

No reviewed provision states whether allocation is first-in-time, pro rata, agency-first, consumer-first, or ordered by the Commissioner.

Likewise, no reviewed provision states:

• Whether a claim payment reduces remaining coverage permanently.
• Whether the licensee must replenish the bond immediately.
• Whether a rider restoring the penal sum is required.
• Whether the bond renews its aggregate annually.
• Whether multiple successive bonds can be stacked.
• Whether prior surety liability is primary or excess to a replacement bond.

Those are material launch and recovery gaps.

5.6 Liability beyond the bond

The bond is security, not a liability cap. The Commissioner’s administrative powers and the consumer’s private remedy exist separately. A $25,000 bond does not convert a larger statutory loss into a $25,000 maximum obligation of the CSO. Actual collection may nevertheless depend on principal solvency, surety coverage, procedural prerequisites, available remedies, and priority. Kansas Legislature+2

5.7 Cases and orders

A focused search of official Kansas court, federal bankruptcy, and OSBC sources did not surface a published decision adjudicating:

• A consumer’s direct action against a Kansas CSO surety.
• Priority among bond claimants.
• Bond exhaustion or replenishment.
• The meaning of the two statutory two-year provisions.
• A Commissioner bond-loss determination.
• A challenge to a bond-amount increase.

That limited search is not proof no case, confidential order, unpublished disposition, or administrative record exists.

Nazar v. Allied Consumer Services states under the former registration regime that the covered provider had to register and post a bond, but the case awarded damages and penalties against the provider. It did not involve an issued bond, surety defendant, bond claim, aggregate limit, priority dispute, or current licensing regime. It was decided on a default and properly supported uncontested summary-judgment record. District of Kansas Bankruptcy Court

Recovery matrix

6. Legislative history and currentness

6.1 2004 enactment

The 2004 enactment already contained:

• The $25,000 amount.
• Rulemaking authority to increase up to $1 million.
• OSBC as obligee.
• An authorized surety or insurance-company issuer.
• Thirty days’ prior written cancellation notice.
• Two-year continuation after surrender, revocation, or expiration.
• Agency expenses/fines/fees and Commissioner-determined consumer-loss coverage.

The 2004 provision did not contain the current express pre-cancellation-violation clause or separate two-year action/inaction language. The selected provision appears on PDF page 2, zero-based PDF index 1; no printed page number is visible in the reproduced scan. Kansas Legislature

6.2 2017 amendment

The selected 2017 session-law text added that:

• Cancellation does not affect surety liability for violations occurring before the effective cancellation date.
• Principal and surety remain liable for two years from the action or inaction giving rise to a claim.

The amendment did not change the $25,000 amount or $1 million ceiling. Chapter 52 was approved April 18, 2017 and took effect upon publication in the statute book; the selected volume records July 1, 2017 publication/authentication. The prior P2 read covered the selected pages, not the full 1,135-page volume, entire chapter, or every later amendment. Kansas Secretary of State+2

6.3 Currentness qualification

The current Revisor page is labeled “2026 Kansas Statutes,” and the official OSBC law book is labeled 2026. Their displayed website-update timestamps are data observations, not themselves enactment or effective dates. This pass did not perform a complete post-2017 bill-history or future-effective-law audit.

The 2020 specimen’s continued use of “registration” does not override the current codified “license” language and is one reason not to treat that specimen as authenticated current mandatory text.

B. Source table

C. Claim table

D. Bounded security examples

Common conditions

These examples assume a covered, nonexempt Kansas CSO applicant or licensee. They do not establish an actual bond, valid claim, Commissioner determination, surety solvency, priority, or recovery. Amounts are dollars; no rounding is required. No fee earning, trust accounting, or federal advance-fee permission is inferred.

Example S1 — Publicly verified base amount

Inputs

• Covered Kansas CSO applicant.
• No verified bond-increase regulation.
• No actual NMLS license item requiring a different amount.

Calculation

Plain text

Statutory amount                              $25,000
Verified increase formula                           none
Current evidence-backed required amount       $25,000

Result: The supported amount is $25,000.

The $1 million figure is not added, averaged, or treated as optional agency discretion without a valid defining regulation.

Example S2 — Hypothetical higher amount

Assume a hypothetical adopted regulation requires a $400,000 bond for a defined tier.

Plain text

Hypothetical prescribed amount               $400,000
Statutory ceiling                           1,000,000
Excess over ceiling                                  0

Numerically, $400,000 is within the ceiling. It would be lawful only if the hypothetical rule were valid, operative, and applicable.

A hypothetical $1,200,000 rule would exceed the statutory ceiling by:

Plain text

$1,200,000 − $1,000,000 = $200,000

No actual Kansas regulation prescribing either amount was verified.

Example S3 — Multiple claims under the specimen’s aggregate term

Express assumptions

• Current accepted instrument contains the same aggregate term as the 2020 reference specimen.
• All claims are valid and properly determined.
• No prior payments have reduced the penal sum.
• No priority rule is assumed.

Hypothetical amounts

• Consumer A loss: $9,000
• Consumer B loss: $11,000
• Agency amount: $8,000

Plain text

Total asserted covered amounts:
$9,000 + $11,000 + $8,000 = $28,000

Hypothetical aggregate bond limit             $25,000
Excess over penal sum                           3,000

Result under the express specimen assumption

• Maximum aggregate surety exposure: $25,000.
• Unsecured excess against the principal: $3,000.

Not established

• Which claimant receives what portion.
• Whether agency or consumers have priority.
• Whether payment is pro rata.
• Whether the bond replenishes.
• Whether the actual current form has the specimen aggregate term.
• Whether any claimant actually recovers.

Example S4 — Loss exceeds bond amount

Inputs

• Commissioner-determined consumer loss: $40,000.
• Available bond penal sum: $25,000.
• No earlier claims.
• Aggregate treatment assumed only for illustration.

Plain text

Covered loss                                 $40,000
Possible bond security                        25,000
                                              ------
Amount beyond bond security                  $15,000

The $15,000 excess remains potential principal liability; the bond does not erase it. Neither the $25,000 nor the $15,000 is guaranteed collectible.

Example S5 — Cancellation and pre-effective violation

Use variables rather than invented calendar dates.

• N = date legally effective notice is given to the Commissioner.
• E = lawful cancellation effective date, not earlier than completion of the applicable 30-day notice period.
• A1 = principal act occurring before E.
• A2 = principal act occurring after E.

Branch A — Act A1 before effective cancellation

The old bond remains potentially responsive because cancellation does not affect liability for pre-effective violations. The act-specific liability clock runs for two years from A1.

Branch B — Act A2 after effective cancellation

The old bond is not established as covering A2. A replacement bond with a valid effective date would need to be examined.

Held

• Whether N means mailing, NMLS submission, delivery, or receipt.
• Exact interaction between general time computation and the accepted form.
• Whether a replacement instrument avoids all gaps.

Example S6 — Surrender and the two clocks

Inputs

• Covered act: January 15 of hypothetical Year 1.
• License surrender: July 1 of hypothetical Year 1.

Clock 1

Plain text

Two years from covered act:
January 15, Year 1 → January 15, Year 3

Clock 2

Plain text

Bond nonexpiration tail:
July 1, Year 1 → July 1, Year 3

The statutory clocks produce different dates. This example demonstrates the issue only. PASS-04 does not decide whether the later date extends claim-presentment rights, whether both conditions must be satisfied, or when an action must be filed.

Example S7 — Proposed cash substitute

Inputs

• Applicant places $25,000 cash in a restricted account.
• Applicant files no surety bond.

Plain text

Cash held                                      $25,000
Verified statutory substitution authority             0
Required surety bond on reviewed law           $25,000

Result: Equal numeric value does not make the cash account a lawful substitute. The statutory bond remains required unless an operative alternative-security authority is produced.

Example S8 — Nonprofit noncustodial provider

Inputs

• Entity is nonprofit.
• Entity does not receive creditor-payment funds.
• Its actual services nevertheless fall within a covered negotiation or credit-improvement branch.
• No valid exemption applies.

Result

Plain text

Entity required to obtain CSO license: conditional yes
Bond amount on verified public law:         $25,000

Neither nonprofit status nor noncustodial operation changes the verified amount. The bond does not resolve the prior noncustodial agreement issue, authorize a percentage fee, or establish federal timing compliance.

Example S9 — Affiliate administrator

Inputs

• Licensed CSO A has a $25,000 bond.
• Affiliate B administers payments or performs other services.
• B is not named as principal on the available facts.
• No current official bond form or agency contract is supplied.

Result

Plain text

A's verified penal sum                         $25,000
Automatically verified coverage for B                 $0

The zero does not mean B can never be covered. It means no automatic affiliate coverage was established. Current bond text, agency relationship, legal responsibility, and B’s own licensing status are required.

Example S10 — Replacement before cancellation

Assumptions

• Old bond cancellation effective at E.
• New bond accepted and effective at E, with no gap.
• Both instruments otherwise valid.

Plain text

Old bond coverage period: through E, subject to tail
New bond coverage period: beginning E
Temporal gap:                              0 days

This numeric continuity does not decide which bond responds to a later-discovered claim. The date of the underlying act, wording of both instruments, claim rules, and statutory clocks remain controlling.

E. Component coverage and gap table

F. Researcher self-check

Actually read or inspected in PASS-04

• Complete current K.S.A. 50-1119.
• Relevant current K.S.A. 50-1118, 50-1127, 50-1128, 50-1129, 50-1132, and 50-1133.
• Current general time-computation provisions in K.S.A. 60-206.
• Bond page of the official 2026 OSBC CSO compilation, both parsed and visually inspected.
• Article 25 outline and complete K.A.R. 17-25-1, with PDF-index and printed-page systems distinguished.
• Current OSBC applications/forms CSO section.
• NMLS ESB adoption-table Kansas row, parsed and visually inspected.
• Relevant current NMLS Policy Guidebook ESB chapter, limitations, and glossary.
• NMLS cancellation, return, void, replacement, rider, and increase operational guidance.
• Complete two-page private-hosted 2020 Form CSO-2 specimen, parsed and visually inspected.
• Selected 2004 enactment page, visually inspected.
• Bounded current OSBC administrative-interpretation and guidance compilations.
• Selected bond reference and procedural posture in Nazar.
• Focused official-domain searches for CSO bond cases, orders, forms, and claim procedures.

Evidence-backed reuse, not a fresh complete read

• Selected 2017 session-law §15 and §27 pages previously read in PASS-02. A fresh direct fetch on October 26 timed out; the earlier actual selected reading was preserved rather than relabeled.
• Prior P1 and P2 classification, exemption, fee, federal, and case limitations.
• Prior direct Kansas administrative-rules endpoint HTTP 405 result.

Not read or not obtained

• The current live Kansas CSO bond rendered inside NMLS.
• A complete current Kansas CSO new-application or renewal checklist.
• An official current bond rider, cancellation form, reinstatement form, claim form, proof-of-loss form, or collateral-release form.
• Any issued bond, surety power of attorney, rider, premium invoice, indemnity agreement, claim file, or OSBC loss determination.
• Any named provider’s NMLS bond status.
• Any named surety’s Kansas authorization or solvency.
• A complete Article 11 amendment history after 2017.
• A complete Kansas appellate/federal citator.
• A complete OSBC enforcement, administrative-order, settlement, or license-item docket.
• A controlling decision on direct surety standing, priority, aggregate limits, exhaustion, replenishment, stacking, or statutory-clock interaction.
• Private surety underwriting or collateral requirements.
• Insurance-guaranty-association, surety-insolvency, bankruptcy, bond-priority, or receivership rules.
• Full private, administrative, KCPA, punitive, limitations, or restitution analysis outside the security boundary.

Method and conclusion limits

• The $1 million ceiling was not converted into a current amount.
• Search silence was not treated as proof that no rule, order, or case exists.
• The current official Article 25 compilation was not treated as infallible proof that no separate authority exists.
• “Insurance company” was not converted into an alternative insurance-policy pathway.
• A private 2020 reference specimen was not treated as an authenticated current form.
• NMLS workflow instructions were not treated as Kansas substantive law.
• The statutory bond was not treated as a consumer-fee authorization, advance-fee exemption, trust substitute, or recovery guarantee.
• No hypothetical claim was represented as valid, approved, payable, or collectible.
• No component, Kansas dossier, parent dossier, A066, operating model, or publication-readiness acceptance is supplied.

PASS-04 conclusion

Kansas currently establishes a $25,000 applicant/licensee surety bond, payable to OSBC and issued by an authorized surety or insurance company. The bond secures faithful statutory performance and is available for Commissioner-levied agency amounts and Commissioner-determined consumer losses. A higher amount requires a valid rule-defined increase and cannot exceed $1 million; no current public increase formula was verified.

The bond must be maintained, cannot terminate without 30 days’ prior written notice, preserves liability for pre-cancellation violations for two years from the underlying act or omission, and remains unexpired for two years after the earliest license surrender, revocation, or expiration. The exact current instrument, aggregate terms, claim procedure, direct consumer standing, priority, exhaustion, replenishment, successive-bond interaction, and alternative-security possibilities remain unresolved on the available public evidence.

END S_KS PASS-04.